Correlation Between Udemy and Li Auto
Can any of the company-specific risk be diversified away by investing in both Udemy and Li Auto at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Udemy and Li Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Udemy Inc and Li Auto, you can compare the effects of market volatilities on Udemy and Li Auto and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Udemy with a short position of Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Udemy and Li Auto.
Diversification Opportunities for Udemy and Li Auto
Very good diversification
The 3 months correlation between Udemy and Li Auto is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Udemy Inc and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto and Udemy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Udemy Inc are associated (or correlated) with Li Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Auto has no effect on the direction of Udemy i.e., Udemy and Li Auto go up and down completely randomly.
Pair Corralation between Udemy and Li Auto
Given the investment horizon of 90 days Udemy Inc is expected to generate 0.9 times more return on investment than Li Auto. However, Udemy Inc is 1.11 times less risky than Li Auto. It trades about 0.04 of its potential returns per unit of risk. Li Auto is currently generating about -0.06 per unit of risk. If you would invest 784.00 in Udemy Inc on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Udemy Inc or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Udemy Inc vs. Li Auto
Performance |
| Timeline |
| Udemy Inc |
| Li Auto |
Udemy and Li Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Udemy and Li Auto
The main advantage of trading using opposite Udemy and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Udemy position performs unexpectedly, Li Auto can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Li Auto will offset losses from the drop in Li Auto's long position.| Udemy vs. American Public Education | Udemy vs. ATA Creativity Global | Udemy vs. Cogna Educacao SA | Udemy vs. Adtalem Global Education |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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